What kind of economist should I be when I grow up? The opening weeks of the year have brought an embarrassment of answers.
Andrew Haldane, chief economist of the Bank of England, won headlines for comparing economists to weather forecasters. Alas, it was not a flattering comparison: Haldane mentioned Michael Fish’s infamous October 1987 forecast on primetime British TV, which offhandedly reassured viewers that there wouldn’t be a hurricane so “don’t worry”. The warning was followed by a severe storm that killed 18 people in the UK and four in France.
But if economists are like weather forecasters, the lesson is that they should keep trying. Meteorologists have a difficult job yet they do it well — partly with the help of half-a-million weather measurements a day and powerful supercomputer simulations. Perhaps economic forecasting should emulate that approach. For now, many serious economists think that economic forecasting is for fools and charlatans, and that real economists have a different job entirely.
What, then, is that job? Beatrice Cherrier, a historian of economic thought, points out that economists have long looked for an appealing metaphor. In the 19th century, economics was part science, part moral philosophy and part art. Later, economists liked to compare themselves to physicists, borrowing the jargon, the methodology and the mathematics of physics. With the discipline inspiring awe after the splitting of the atom, it must have been tempting for economists to seek the same quality of insight — not to mention the prestige and the funding.
Whether economics has really been strengthened by ideas from physics remains a matter of controversy. Some critics say that economists should embrace ideas from psychology. Others simply argue that economists have copied the wrong kind of physics and, if they used more up-to-date technical tools, they’d achieve better results.
An alternative view is that economics should be a practical, problem-solving discipline. The most famous proposal along these lines is a throwaway remark from John Maynard Keynes, who looked forward to the day when economists would be “humble, competent people on a level with dentists”.
Humility and competence sound good to me — and dentistry seems an appealing model in other ways. Dentists don’t forecast how much tooth decay you might suffer over the next decade; they tell you to floss and to lay off the fizzy drinks. Dentists know that their job is not forecasting but preventing or solving problems.
But Tony Greenham, a programme director at the RSA, recently declared that Keynes was quite wrong. Dentistry is built on objective science, says Greenham, but economics is not: economic analysis should involve clashing schools of thought, debating ideas in front of a public who must then make their choices at the ballot box. Greenham has a point, of course. Economics will never be a hard science, so there must always be room for debate. And most economic policy decisions produce winners and losers, each with a right to be heard.
Still, if dentistry offers a practical, evidence-based approach to solving problems, I’m not sure that Greenham is wise to warn economists away from that goal unless there really is no hope. Several leading economists have argued that economics should have a more practical bent. Al Roth, Nobel laureate in economics, says that economists should be like engineers. Roth has designed systems for matching students to schools and kidney donors to recipients, and his argument is that when designing such a system it’s not enough to get the broad outlines right — as a physicist or an economic theorist might — but the details too.
Meanwhile Esther Duflo — too young for a Nobel but hugely celebrated in the profession — recently gave the prestigious Ely Lecture in Chicago. She argued that economists should act like plumbers, or at least that, “some of us should do some of it some of the time.”
For Duflo, plumbing is even more practical than engineering: not only must the plumber install the system, she must observe and tinker with it as leaks and blockages become apparent. Issues that weigh heavily in theory may be trivial in practice, and vice versa.
So perhaps I should be a meteorologist, or dentist, or engineer, or plumber — or, as others might advise, psychologist, epidemiologist, historian, anthropologist or data scientist? Of course, the wonderful and frustrating thing about economics is that each of these approaches — and others — has something to offer as we try to comprehend the dizzying interactions of the economy all around us. No wonder economics is so much fun — and so hard to do well.
As I pondered all this career advice, I couldn’t help but think of Bill Phillips. Phillips was born in 1914 to a New Zealand farming family. He learnt engineering via correspondence course, and was a gold miner, crocodile hunter and war hero. He studied sociology but became an economics professor at the London School of Economics. He produced perhaps the most-cited macroeconomic paper ever written, describing the “Phillips curve”. He learnt several languages and, later in life, was fascinated both by complex dynamic systems and by the economy of China. He also built the first computer model of the British economy. It was a hydraulic computer — a system of equations, crafted in plumbing.
Now that’s an economist.
Written for and first published in the Financial Times.